Muhammad Yunnus: "Poverty in the world is an artificial creation"

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This year’s Nobel Peace Prize (2006) was awarded to Muhammad Yunus and the Grameen Bank for promoting peace through economic uplifting of the Bangladeshi masses. The Norwegian Nobel committee praised them “for their efforts to create economic and social development,” believing that “peace can only be created when large population groups find ways in which to break out of poverty and development from below creates democracy and the development of human rights”.

Inspired by the 1974 famine in Bangladesh, Yunus began to fight poverty by endowing small loans to women from the village of Jobra, enabling them to make and sell bamboo furniture. He discovered that small loans could profoundly impact the lives of poor people. Believing that “poverty in the world is an artificial creation” and that charity is not a solution to poverty, he decided to set up the Grameen bank and the micro-credit system in 1976.

The concept of micro-credit is to provide small loans to Bangladeshis who are unable to access funds through traditional bank loans due to their extreme level of poverty. The loans are used for simple income generating activities such as lime making, pottery, weaving and garment making – empowering people to fight their way out of poverty. To ensure repayment, the bank uses a system of ‘solidarity groups’ that consist of five people. Initially, only two members of a group are allowed to apply for a loan. Depending on their ability to repay, the next two borrowers can apply, followed by the fifth member. By applying together for loans, members act as co-guarantors of repayment and support one another in their struggle for economic advancement.

In a country where only 1% of bank loans are given to women, the organization felt that it was integral for women to participate on an equal footing to men if economic and political democracy is to be achieved. Believing that women suffer disproportionately from poverty and that they are more likely to devote their earnings to the family, they were specifically targeted by the bank. Today, most Grameen Bank members are women. Women proved to be entrepreneurial in addition to being reliable borrowers. Repayment rates currently stand at 97%, dispelling previous attitudes that poor women are the least bankable of all (

Micro-credit and the Grameen Bank have provided a liberating force in societies where women have to constantly struggle against repressive social and economic conditions. Hence they have been able to raise their status, lessen dependency on their husbands, and improve the overall health of their children.Today, $USD 5.1 billion in loans has been given to 6.67 million borrowers across 72,096 villages – 86% of the total number of villages in Bangladesh. Additionally, saving has been encouraged and 5% of loans are deposited in group funds every week, proving that the poor are capable of saving. Group savings have now reached an outstanding $USD 162 million ( The Grameen Bank and Micro-credit model of financing has spread to almost 100 countries, most of whom also emphasize lending money to women.

Muhammad Yunus has empowered the poor not only in Bangladesh but around the world by exemplifying their need to be provided with opportunities and institutional support, enabling them to take ownership over their lives and make a positive change.

Originally Posted 6/4/2008

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